What is the difference between term and permanent life insurance?

Term life insurance is a form of life insurance that is designed to provide coverage for a certain period of time. Typically, term life insurance plans provide coverage for a period of 5, 10, 15, 20, or 30 years. If the insured party passes away while the policy is still active, the policy will pay out a death benefit to the beneficiary. Permanent life insurance, such as whole life insurance, is designed to provide coverage over the course of the insured party’s entire lifetime. Permanent life insurance also has a savings component, known as cash value, that grows over time. Some permanent life insurance policies also come with additional options, such as the ability to borrow money against the cash value, or the ability to use the cash value to pay premiums if the policyowner experiences temporary financial difficulty. The difference between term and permanent life insurance is that term life insurance is designed for temporary periods of coverage, while permanent life insurance is designed for lifelong coverage. Term life insurance policies are generally cheaper than permanent life insurance policies because they do not offer the same cash value and other benefits as permanent life insurance.

Related FAQs

What factors should be considered when purchasing insurance?
What is the difference between a policy and a contract of reinsurance?
How does the law protect insurance policyholders?
What is an insurance broker?
What is the role of an insurance actuary?
What is the regulation of insurance companies?
What is the role of an insurance adjuster?
What is the difference between an insurance claim and a lawsuit?
What is uninsured/underinsured motorist coverage?
What is the difference between an insurance adjuster and an insurance investigator?

What is the difference between term and permanent life insurance?

Related FAQs

Related Blog Posts